Dividend Increases/Decreases for the Week Ending December 11
December 14, 2015
Below we provide a list of firms that raised/lowered their dividends during the week ending December 11. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week Abbot Labs (ABT): now $0.26 per share quarterly dividend, was $0.24. Avago Technologies (AVGO): now $0.44 per share quarterly dividend, was $0.42. Bristol-Myers Squibb Company (BMY): now $0.38 per share quarterly dividend, was $0.37. Buckle (BKE): now $0.25 per share quarterly dividend, was $0.23. Capella Education (CPLA): now $0.39 per share quarterly dividend, was $0.37. Croghan Bancshares, Inc. (CHBH): now $0.35 per share quarterly dividend, was
Re: Energy Transfer Partners
December 13, 2015
I would like to say that I am sorry if members have not done well on ETP. First, we can never make recommendations on any stocks or strategy. We can only express our views on the company and explain what we do in the newsletter portfolios. The position in ETP was removed from the Dividend Growth Newsletter portfolio several months ago on August 7, 2015: /20130729_1 We noted the following at the time: Energy Transfer Partners was removed from the Dividend Growth Newsletter portfolio at $47.10 per share, comfortably above its cost basis, even after excluding distributions received. The September 1 edition of the Dividend Growth Newsletter noted that ETP had been removed, and the position has not been a part of the
The Dividend Cushion Ratio Catches More Dividend Cuts
December 13, 2015
Retirees know that a dividend cut could be disastrous to their income portfolio, as future income is not only reduced but it is also very likely that capital is permanently impaired. The Dividend Cushion ratio, an integrated leverage and liquidity metric, is designed to provide the income investor with a trusted and independent opinion of the safety and future growth potential of a firm’s dividend. It not only has shown to predict dividend cuts, but the ‘cushion’ behind the Dividend Cushion reveals just how much capacity a firm has to continue growing its dividend into the future. Technically speaking, the Dividend Cushion ratio considers the firm’s net cash on its balance sheet (cash less debt) and adds that to its
This MLP’s Distribution Is At Serious Risk
December 11, 2015
A version of this article was originally published on November 16. The Keystone XL pipeline has been perhaps the most talked about issue surrounding midstream operators in recent years. The rejection of the proposed pipeline by the US government has brought increased attention and bravado to pipeline opponents, while also highlighting the increased risks associated with midstream entities. Specifically, pipeline opponents are now turning their attention to Kinder Morgan’s (KMI) Trans Mountain pipeline in southern Canada. Environmental advocates are pushing for a similar result that was realized along the northern Pacific coast of Canada, where the Canadian government will ban crude oil tankers, effectively ending the usefulness of Enbridge’s (ENB) Northern Gateway pipeline. These developments are both damaging to pipeline
Why Did It Take So Long To Make A Call on Kinder Morgan?
December 11, 2015
Republished from June 28, 2015. Members: Thanks for the great questions. The primary reason for the change in our opinion of Kinder Morgan (KMI) rested in a comprehensive evaluation of the combination of four separate entities that were combined into one corporation coupled with the release of audited and consolidated financial statements via the 10-k release in late February in addition to the incremental information in Kinder Morgan’s first-quarter results, released after that. It took several months of thesis re-development. The company was removed at a profit in the Dividend Growth Newsletter portfolio and was a substantial relative outperformer compared with the rest of the oil universe during its holding period. Readers were positioned extremely well prior to the collapse
Risky Business: Business Development Companies
December 11, 2015
Big name business development companies (BDCs) such as Prospect Capital () and Main Street Capital () continue to be vulnerable equities, in our view, particularly as credit conditions deteriorate. Ongoing pressure in the energy and metals and mining markets has increased the wariness of investors and their propensity to tolerate weak credits (and those tied to them), and several factors loom that may significantly increase the already-high level of business-model risk associated with BDCs. Investing in these relatively obscure publicly-traded “venture capital” entities is not for the faint of heart. The market may bear witness to a surge in defaults within the high-yield arena in coming years, and a prolonged weakness in commodity prices may seal that fate. Mostly overleveraged upstream
Alert: Energy Transfer Equity Is More than 7x Leveraged!
December 10, 2015
Edited December 16, 2015 at 1:07pm following conversation with ETE executive team. The Securities and Exchange Commission performs a vital function when it comes to truth in reporting, helping investors sort through what’s true and what’s not. The Form 10-K (annual) and Form 10-Q (quarter) can be used to compare what a company’s reported, actual net leverage is to what management says it is – in their presentation slide deck or on some of the more popular business channels. Investors in midstream equities have long been “pitched” the idea that leverage is contained, but from our perspective, it is not. Bondholders deserve to know the actual, reported net leverage of companies in the midstream space because they won’t hear it
Corporate Shopping This Holiday Season
December 10, 2015
2015 may very well end up being remembered as the “year of the merger,” as the total dollar value of mergers and acquisitions in the year is on pace to set an all-time record. According to recent reports, Dow Chemical (DOW), DuPont (DD), and Yahoo! (YHOO), are doing what they can to be a part of that record. All three have faced tremendous pressure from activist investors as of late. On December 8, Dow Chemical and DuPont were reported to be in advanced talks on a massive merger. The rival chemical producers would likely split into three separate companies following the transaction; the three independently operating businesses would be material sciences, specialty products, and agrochemicals. Though labeled a “merger of
Presentation Slides: Kinder Morgan, MLPs, and the Risk of $0
December 10, 2015
Please select the image below to download the slides:
Not So Happy Holidays at Kinder Morgan
December 9, 2015
In a sharp reversal from just a few days ago when Kinder Morgan (KMI) said it would generate sufficient “distributable cash flow” to fund dividend growth of 6%-10% in 2016, the executive team opted to cut its dividend December 8 by 75%, to $0.50 per share annually, a move that despite our best efforts has still managed to surprise the market, as evidenced by shares indicated down in after-hours trading. Though we plan to tweak our valuation model to account for the impact of recent acquisitive activity and the slide in energy resource pricing on Kinder Morgan’s intrinsic value, we’re reiterating the low end of our fair value estimate range at this time. We plan to update our 16-page valuation
